The high-stakes negotiations between two of India’s most prominent edtech unicorns have officially ended without a deal. After months of discussions aimed at creating an edtech powerhouse, upGrad confirmed it will not proceed with the acquisition of the SoftBank-backed Unacademy.
The fallout highlights the ongoing valuation “reset” in the sector, as companies that reached multi-billion dollar heights during the pandemic now face a much harsher fiscal reality.
The Valuation Disconnect
The primary deal-breaker was a significant asymmetry in how both companies valued themselves and each other in a potential all-stock transaction.
- Unacademy’s Peak vs. Present: At its height in 2021, Unacademy was valued at $3.44 billion. The proposed 2026 deal reportedly valued the startup at just $290 million to $300 million—a staggering 90% erosion in value.
- The “upGrad Side” of the Math: upGrad reportedly valued itself at approximately $2 billion. At these levels, the merger would have led to a 10–15% dilution for upGrad shareholders, a cost the board found unjustifiable given Unacademy’s shrinking core business and the heavy investments required for its offline centers.
- The Conflict: While Unacademy sought a valuation closer to the $400 million mark, upGrad identified internal business challenges and “high-profile exits” that triggered alarms during the due diligence process.
Unacademy’s Second Aborted Exit
This marks the second time in just over a year that Unacademy has failed to secure a buyer. In late 2024, the company held similar talks with the Kota-based Allen Career Institute at an $800 million valuation, which also collapsed over price disagreements.
What Happens to the “AirLearn” Spinoff?
The proposed merger was also supposed to facilitate a major leadership shift.
- The Plan: Founders Gaurav Munjal and Roman Saini were reportedly planning to spin off AirLearn (Unacademy’s AI-based language learning vertical) into a separate entity.
- The Result: With the upGrad deal off, plans for the AirLearn spinoff and a potential $17 million funding round from Peak XV and Blume Ventures for the new venture are reportedly “on hold” or facing deep uncertainty.
Key Financial Comparison: upGrad vs. Unacademy
| Metric | upGrad (FY25) | Unacademy (FY24/25) |
| Operational Revenue | ~₹1,650 Crore | ~₹864 Crore (Slight decline) |
| Profitability | EBITDA Profitable | Narrowing losses (~₹284 Cr loss) |
| Current Valuation | ~$2.0 Billion (Target) | ~$300 Million (Offer) |
| Core Strategy | Upskilling & Higher Ed | Offline Test-Prep (Pivoting) |
The Path Forward
For upGrad, the withdrawal allows the company to sharpen its focus on its own 2027 IPO. The firm recently added Amitabh Kant to its board, signaling a move toward global expansion and public market readiness.
For Unacademy, the road ahead is more complex. After rolling back controversial changes to its ESOP policy and facing a sharp decline in its online subscriber base, the company must now decide whether to continue as a standalone “leaner” entity or search for a third suitor in an increasingly cautious market.
“Yes, we are not proceeding due to valuation differences. While we cannot comment on specific numbers, we were unable to arrive at a mutually agreeable valuation.” — Ronnie Screwvala, Co-founder, upGrad
